Free CPA BAR (Business Analysis & Reporting) State and Local Governments Practice Questions
State and local government accounting on the CPA BAR exam covers governmental fund types (general, special revenue, capital projects, debt service), GASB standards, budgetary accounting, and government-wide financial statement preparation.
Sample Questions
Question 1
Easy
Under GASB standards, what is the purpose of a fiduciary fund?
Solution
C is correct.
Fiduciary funds are used to report resources held by a government in a trustee or custodial capacity for external parties. These resources cannot be used for the government's own programs or operations. Examples include pension trust funds, investment trust funds, private-purpose trust funds, and custodial funds.
Fiduciary funds are used to report resources held by a government in a trustee or custodial capacity for external parties. These resources cannot be used for the government's own programs or operations. Examples include pension trust funds, investment trust funds, private-purpose trust funds, and custodial funds.
Question 2
Medium
Under GASB Statement No. 34, where may a government present budgetary comparison information?
Solution
GASB Statement No. 34 provides governments with two options for presenting budgetary comparison information: (1) as required supplementary information (RSI) following the notes to the financial statements, or (2) as an additional basic governmental fund financial statement. Either presentation satisfies the requirement, though the RSI approach is more commonly used in practice.
Question 3
Hard
The primary objective of budgetary comparison reporting in a state or local government's annual financial report is to allow users to assess which of the following?
Solution
The primary objective of budgetary comparison reporting under GASB Statement No. 34 is to demonstrate fiscal accountability by showing whether the government obtained and used resources in accordance with its legally adopted budget. The budget represents the government's legal authority to spend, and the comparison allows citizens, oversight bodies, and other users to assess compliance with that legal spending authority. This is distinct from GAAP fair presentation, efficiency comparisons, or internal control assessments.